“You wake up today and the dollar is ₦1,300. By noon, it’s ₦1,450. You refresh your screen before evening, and it’s ₦1,520. You haven’t even sold one item, but you’ve already lost money. Welcome to Nigeria—where doing business is extremely risky and unpredictable — like a deadly gamble.”
That’s the lament of a once-thriving electronics dealer in Alaba market. Across Nigeria, from Bodija to Sabon Gari, business owners are not just managing inventories or customers anymore—they are managing blood pressure, anxiety, and a currency that refuses to behave. While macroeconomic terms like “FX liberalization,” “inflation targeting,” and “interest rate hikes” dominate policy rooms, the average trader in the Nigerian business space seems to hear only one thing: “Prepare to suffer.” But is this suffering inevitable? Can businesses in Nigeria survive—or even thrive—in a system designed like a maze with no exit?
In recent years, Nigeria’s economic landscape has been characterized by significant turbulence, marked by soaring inflation, volatile exchange rates, and fluctuating interest rates. These macroeconomic challenges have profound implications for businesses, particularly small and medium-sized enterprises (SMEs) that form the backbone of the Nigerian economy. In the past year, Nigeria has undergone what many call “bold economic reforms.” But for most Nigerian businesses, it feels more like economic surgery without anesthesia. From the sudden removal of petrol subsidies to the unification of exchange rates and the relentless rise in the Monetary Policy Rate, now at an eye-popping 27.75% as of March 2025 according to Premium Times, the terrain for commerce has become not just rough—it’s best described as a war zone.
The Central Bank of Nigeria (CBN), in its pursuit of taming inflation—currently at 33.69% as of April 2025 per NBS—has squeezed interest rates, starving small businesses of accessible credit.
Add a volatile foreign exchange regime and Nigeria becomes a perfect storm for business fragility. This isn’t just a theoretical framework for understanding the business terrain in Nigeria; this is the daily grind for tailors, tech startups, transporters, and traders across the country. The Naira’s mood swings—sparked by erratic policies and global economic tremors—have created a hypertensive environment for Nigerian enterprises. But beyond the diagnosis, we need to navigate paths to healing, no matter how turbulent the pulse.
The Nigerian Naira has experienced significant depreciation against major currencies, leading to increased costs for imported goods and raw materials. This volatility poses challenges for businesses reliant on imports, as fluctuating exchange rates complicate pricing strategies and financial planning. While these measures aim to stabilize the economy, they also result in higher borrowing costs for businesses, particularly SMEs seeking capital for expansion or operational needs.
No doubt, this has an endearing impact on everyday businesses as it has increased Operational Costs, reduced access to capital and reduced consumer purchasing power. Running a business in Nigeria today is like gambling with your livelihood, because the economy is too unstable to plan or predict—and the risks are very high.
The combination of high inflation and exchange rate volatility has led to increased costs for goods and services. Elevated interest rates have made borrowing more expensive, limiting access to affordable credit. Inflationary pressures have eroded consumer purchasing power, reducing demand and forcing businesses to adjust offerings and marketing strategies.
Imagine a shoe seller in Aba who imports synthetic leather from China. Last month, her supplier charged her $500. At ₦1,200/$, that was ₦600,000. Today, it’s ₦1,550/$, and her cost has ballooned to ₦775,000. Multiply that by 10 or 20 units, and you realize it’s not just her shoes inflating—it’s her entire business model. Meanwhile, a customer walks into her shop still expecting to buy those shoes at last month’s prices.
This is the brutal economic theater Nigerian businesses perform daily. The gap between policy logic and market reality widens by the day. The FX rate volatility, caused largely by the CBN’s managed float system and insufficient dollar supply, has made pricing unpredictable. While large corporations can hedge, most small businesses cannot. And when the Monetary Policy Committee raises interest rates to “curb inflation,” it sounds noble—until the entrepreneur realizes her microfinance loan now comes with 36% annual interest. These aren’t just macroeconomic theories; they are nails in the coffins of honest hustles. Yet, in true Nigerian fashion, many are adjusting, innovating, and pushing back. Survival isn’t guaranteed, but the spirit of enterprise is still alive.
Engaging with domestic suppliers reduces reliance on imports and can lead to more stable pricing structures. Implementing robust financial planning and risk management strategies is crucial. Businesses should conduct regular financial analyses, forecast cash flows, and establish contingency plans to navigate economic uncertainties. Adopting digital tools and technologies can enhance operational efficiency and reduce costs. E-commerce platforms, digital payment systems, and automation can streamline processes and expand market reach. Businesses, particularly SMEs, can benefit from engaging with industry associations and advocacy groups to influence policy decisions. Collective action can lead to more favorable business environments and access to support programs.
While the CBN’s interest rate hikes aim to control inflation, there is a need for balanced approaches that consider the implications for business growth. Ongoing assessments and adjustments to monetary policies can help create a more conducive environment for businesses.
Government programs that provide financial assistance, training, and resources for SMEs are essential. Initiatives that offer low-interest loans, grants, and capacity-building workshops can empower businesses to adapt and thrive.
Investments in infrastructure, such as transportation networks and energy supply, can reduce operational costs for businesses and enhance overall economic productivity.
The average Nigerian entrepreneur doesn’t need another policy speech. They need stable electricity, predictable pricing, and a currency that doesn’t have mood swings worse than a telenovela character. While inflation, interest rates, and exchange rates are complex, the message from the street is simple: “Make business make sense again.”
Yes, monetary tightening is a textbook response to inflation. Yes, subsidy removal was inevitable. But without cushioning mechanisms—access to affordable credit, targeted tax reliefs, forex access windows for SMEs—these reforms in reality become more of a punishment rather than policy.
Policymakers must understand that no economy grows by strangling its most active participants.
However, businesses themselves must also evolve. From digitization to cooperative financing, from local sourcing to community-based trade ecosystems, survival will favor the adaptable. The Naira may be temperamental, but Nigerian business owners have always been tenacious. Nigerian entrepreneurs are not waiting for perfect conditions—they’re creating progress from chaos. With a clearer direction and the right tools, they can turn today’s crisis into tomorrow’s comeback story. What they need now is not pity, but policies that support their potential.
Fesobi is a Research and Policy Analyst at Ominira Initiative for Economic Advancement and Director of Training and Fellowship with Chale Institute. He can be reached at fesobibayonle@gmail.com
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